Does this ex-Senate candidate have a deal for you

What's a coffee shop to do with a late afternoon overstock of blueberry muffins? It wants to offer a special to unload the baked goods, but how does it get the word out to nearby customers?

Jim Bender, the Hollis resident and former Republican candidate for U.S. Senate, says he has a solution for that cafe - and, for that matter, any restaurant, hotel, bar or retailer in a similar fix.

That answer comes in the form of his newest business venture, Ping4Deals, an application that lets merchants offer "deals of the moment" to consumers in real time through their smartphones.

After signing up with Ping4Deals, that coffee shop might plug in an offer ("Free muffin with coffee purchase!") that will pop up on the smartphone of any user with the app who comes within a specified radius of the store. When the muffins are sold out, it can take the deal down.

"For many, many retailers, the most valuable people that you'd like to have (as customers) but have no other way to reach are the people that are walking around 500 feet away from you," said Bender.

The app is the latest entrant in the crowded location-based deal space, but it's working to carve out its own niche by going after some of the world's largest companies - it wants Wal-Mart, Subway, McDonald's, Starbucks and Target on board, and Bender says it is uniquely poised to do so.

"If you're the global retailer, we're everything that you'd like Groupon to be, but they can't be," said Bender.

Global scale

Like many "daily deal" websites, the Groupon business model works like this: A sales force signs up merchants to run deals, the site markets and runs them for a set period of time (usually a day) and keeps a cut of the revenue generated through the deals. The daily deal site makes money, the merchant gets new customers in the door. But, said Bender, this model doesn't suit a global company.

For one, he says, giant retailers don't want a third party entering their revenue stream and deteriorating their gross margins. They have such a large customer base they don't need 1,000 new customers, nor do they want to surrender control of their marketing to an outside entity. They want to be able to react quickly to changes in the marketplace - like being able to take down a deal in seconds if inventory starts running low.

"Plus, (the Groupon) business model doesn't scale globally," said Bender. "Whatever we do, we have to do it all over the globe or be able to do it all over the globe."

So to respond to these needs, his team developed Ping4Deals, a medium through which merchants can offer and manage real-time deals to consumers that come within a close vicinity of the store. Deals can be instituted one store at a time or sent out from a global headquarters to 50,000 stores worldwide, he said.

The app is free for consumers, but merchants need a Wi-Fi network and to pay a licensing fee -- $100 per store -- that lasts through the end of 2012.

"A lot of people considering making investments in us say, 'Isn't this worth a lot more?'" said Bender. But "we're following a strategy of deliberately compressing the market. Basically, we're going to drive our prices so low that you can't say no to us because we want to get everybody."

Certainly, retailers of all sizes are looking for ways to market through smartphones, which are increasingly commanding a captive and growing audience. A Pew Research Center survey conducted in July found that 35 percent of American adults now own smartphones, 68 percent of whom browse the Internet on them on a daily basis and a quarter of whom use the phone as their primary Internet browser.

"This is the screen of the future, and this technology enables things like what we're doing," said Bender. "For 15 years, bricks-and-mortar retailers have been getting beat up by Internet shopping. Now this is a tool to use the Internet to pull some of those customers back in."

There's no doubt that many companies are trying to get their hands on a slice of the location-based deal space. Among others, there's Foursquare, a social game that offers points, badges and the occasional merchant discount for users who "check in" at a venue; Groupon Now, Groupon's new location-based deal service; and Shopkick, which gives users "kicks" each time they enter particular stores, which can be traded in for real-world rewards.

'Ringo in the band'

But Ping4Deals is unique in that it focuses on giant retailers and can be scaled globally, said Bender, who since the beginning of his career has always demonstrated an entrepreneurial bent.

Shortly after graduating from Harvard Business School in the early 1980s, he helped launch a computer peripherals business, IDEA, which in three short years grew to $25 million in revenue and 300 employees. Its rapid ascent ended just as abruptly, when it was bought out by a Swedish firm on New Year's Eve, 1985.

"It was a whirlwind, and we're out," said Bender, who suddenly found himself unshackled by student loans and mortgage payments. "But once you have an experience like that, you look for similar kinds of things."

Not long afterward, he moved his family to New Hampshire, where he took over Logicraft, a then-struggling Nashua company that designed, manufactured and marketed computer network servers. He ran the company until it was sold in 1993, then turned his efforts to Aware, another struggling technology firm based in Boston. After turning it around and eventually taking it public, he left to do angel investing.

"Then I temporarily lost my mind for two years and ran for the United States Senate," said Bender. His slogan was "Jim for Jobs," and despite picking up endorsements from several newspapers in the state, he ultimately finished fourth in the Republican primary, losing the seat to now-U.S. Sen. Kelly Ayotte.

It was hot off the campaign trail when some former colleagues approached Bender about joining Ping4 Group. He accepted, and "became sort of Ringo in the band."

Currently, the app is facing down a chicken-and-egg scenario, because it needs merchants on board to convince users to download the app, but a user base to convince merchants to sign up. To try to get over that hurdle, the group is planning free beta trials at universities across the country.

Eventually, the Ping4 Group plans to expand its offerings beyond just deals to include Ping4Alerts, Ping4Fun, and Ping4Good, all of which would be premised on the same technology.

Thus far, the founders privately fund the company, but its first offering is planned for the fourth quarter. It now employs about 35 people, two-thirds of whom are engineers. Bender has high hopes for future growth of the company, which he says will be headquartered in the Granite State.

"Having lost the election for the Senate, now I'm trying to build what I hope will be the biggest company in New Hampshire," he said, invoking some campaign rhetoric. "And create some jobs, because ultimately that's the best thing we can do to improve our communities."

This article appears in the August 12 2011 issue of New Hampshire Business Review